Net income fell to 6.94 billion shillings ($79 million) in
the 12 months through June from 11.19 billion shillings a year
earlier, the company said in a statement e-mailed by the Nairobi
Securities Exchange today. That missed the 8.19 billion shilling
median forecast of four analysts surveyed by Bloomberg. Cost of
sales grew 10 percent to 31.56 billion shillings, exceeding a
6.4 percent rise in revenue to 59.06 billion shillings, it said.

“Profit came lower than estimates because the cost of
sales was much higher and the one-off gain of 3.6 billion
shillings realized in 2012,” Eric Musau, an analyst at Nairobi-based Standard Investment Ltd., said in an interview.

The higher cost of sales was a result of rising energy
prices, increased warehousing and distribution expenses and a
“significant increase in import charges going into Tanzania,”
Finance Director Tracey Barnes told reporters today in the
capital, Nairobi.

Rated Lighten

EABL, Kenya’s second-biggest company by market value,
warned last month that profit would drop because of higher
financing charges. The brewer took a loan of 19.5 billion
shillings in November 2011 to buy a 20 percent stake in Kenya
Breweries Ltd. from SABMiller Plc and sold a similar
shareholding it held in Tanzania Breweries Ltd. to the same
company. Interest on the loan covered a full year of trading,
compared with seven months in the prior fiscal year, it said.

EABL was rated lighten, the equivalent to sell, in coverage
initiated by Old Mutual Securities Ltd. last month. The
company’s shares advanced 1 percent to 308 shillings in Nairobi,
increasing the year’s gains to 16 percent, under-performing the
FTSE-NSE 25 Share Index, which has gained 29 percent in the same
period.

East African Breweries controls 95 percent of Kenya’s beer
industry, which generates 67 percent of its sales. The company
has operations in neighboring Uganda and Tanzania, where it owns
51 percent of Serengeti Breweries Ltd., that country’s second-largest beer maker. EABL exports its products to the Democratic
Republic of Congo and to South Sudan and has registered a unit
there while it decides whether to enter a joint venture or
operate on its own in the world’s newest country.

Dividend Declared

Sales in export markets grew 20 percent. Kenya and Tanzania
each recorded a 10 percent increase while in Uganda it was
little changed, Chief Executive Officer Charles Ireland told
reporters in Nairobi today.

The company’s capital expenditure amounted to 6 billion
shillings in the 12 months through June and that level will be
retained for the next two financial years, Ireland said.

The company declared a dividend of 5.50 shillings, compared
with 8.75 shillings a year earlier, he said. In coming years
EABL will have a dividend policy of paying 60 percent to 70
percent of its profit after tax, Ireland said.